Reporting its financial results for the six months to June 30, 2018, gaming technology giant Playtech reported a constant currency net-profit drop of nearly 40 per cent, citing difficulties in its Asian operations.
Revenue still climbed year on year, albeit by just four per cent to €436.5m. Adjusted net profit was €83.3m for the period, down 34 per cent year on year and 38 per cent in constant currency terms.
Away from Asia, Playtech is evidently in decent shape. Total revenues excluding Asia operations were up 35 per cent in the period, compared with H1, 2017, while 69 per cent of group revenues are now from regulated markets, up from 50 per cent a year ago. By the end of FY18, Playtech expects its regulated business to account for 80 per cent of group revenues.
Playtech also completed the acquisition of Italian operator Snaitech in the period, on June 5, taking 100-per-cent ownership from August 3. Earlier this year, Playtech indicated its strong acquisitions strategy would likely continue.
Another business grown from acquisition, Playtech BGT Sports, continues to grow and perform well, with revenue up 27 per cent year on year and an eight-per-cent growth in retail machine footprint globally. Sun Bingo also performed strongly in H1, delivering a 28 per cent revenue growth at constant currency.
The company also highlights new licensee wins in some of its key markets, most notably the multi-channel UK deal with Gala Leisure Buzz Bingo. Playtech’s plans to divest its interests in the GVC group are also continuing to progress, the company reports.
Playtech’s poor performance in Asia comes as no surprise following July’s profit warning. At the time, the company said: “As previously reported, average daily revenue in Asia continues to be impacted by an increasingly competitive backdrop.
“Towards the end of the first half, this market has seen a particularly aggressive pricing environment from new entrants to the market and this has impacted revenue.” Playtech said then it has seen “no material improvement” in its Malaysian business, a key territory for its Asian operations.
Keen to highlight solid gains away from Asia, Playtech cited an average daily revenue in the B2B Gaming Division for the first 52 days of Q3 2018 as being up six per cent on the same period in the third quarter of 2017 (five per cent at constant currency and excluding acquisitions).
Alan Jackson, chairman, said in a statement: “Playtech has had an extremely busy first half of the year with important operational progress and new licensee wins in key strategic markets, the UK, Europe and Latin America.
“This continued progress is resulting in higher quality earnings for Playtech with group revenue now 69 per cent regulated. Following headwinds in Asia and a full year contribution from the landmark Snaitech acquisition, regulated revenue at current run rate is expected to be circa 80 per cent in 2018.
“This progress is marked against the disappointing market conditions in Asia. However, it should be noted the headwinds in the Asian market are not reflective of the core strength of the Playtech model as the regulated segment continues to report organic growth and encouraging momentum.
“Looking to the future, the delivery of the Snaitech acquisition in the period has not only delivered geographical diversification of the Group’s revenue profile but more importantly delivered a cornerstone presence in the largest, and one of the fasted growing gambling markets in Europe.”
COMMENT: Faltering Asian performance is an expensive worry for Playtech – and these statements offer no great optimism for its Asia interests. However, Playtech is showing itself to be robust and it can seemingly roll with the punches from Asia while simultaneously looking to new markets. This week the company announced the appointment of former Sportech CEO Ian Penrose to develop Playtech’s vision for sports betting in the US. It is a signal of intent, and one that will likely – ultimately – relegate Playtech’s Asian woes to a historical footnote.